In the latest move in an increasingly bitter battle which is worrying international aid donors and institutions, the Bangladesh high court in Dhaka dismissed an appeal by Yunus against an order delivered last week to leave his post as managing director of the Grameen Bank.

The Central Bank of Bangladesh, the nation's financial regulatory authority, said Yunus, 70, was working in violation of the country's statutory retirement age of 60 as its assent had not been sought for his continuing tenure. Yunus, an outspoken government critic and campaigner against corruption, claimed his removal was in "violation of ... fundamental rights".

International supporters, which include many foreign governments and well-known personalities, have said his departure would be a blow to Bangladesh's poor. Over recent months, the Bangladeshi government, under the prime minister, Sheikh Hasina, has clashed repeatedly with Yunus.

A brief move into politics by Yunus in 2007 enraged politicians who are aware of the development economist's popularity among the country's poor. Loans to around 8 million people have also made the Grameen Bank a potent political asset.

Thousands of protesters marched through Dhaka last weekend to denounce Yunus's removal. The high court said, however, that the Central Bank's decision did not violate the law.

Yunus was not present when the ruling was delivered and has not yet commented on the judgment.

The Grameen Bank issued a statement saying: "We have received the order and are very disappointed. We are consulting our lawyers about the next steps. In the meantime we hope that nothing will jeopardise the stability of the bank."

An appeal to the supreme court is now thought likely.

Yunus has said he wants to step down from his position but at a time of his choosing to ensure a smooth transition for what he calls an institution "of the people". The bank's poor borrowers comprise 75% of its shareholders. The government holds the other 25%.

Yunus is credited with popularising microfinance across the developing world. Most of those getting loans from the bank are women, who are encouraged to form self-help groups. Without needing collateral to borrow, many use their loans to start small businesses that are a first step out of poverty. Hasina has accused the Grameen Bank and other microfinance institutions of charging high interest rates and "sucking blood from the poor borrowers".

The attacks on Yunus come at a time when microlending – once hailed as a model that would change the lives of hundreds of millions in the developing world – faces increasing hostility from politicians across the region.

In India, politicians have accused bankers of profiting from the poor and, in some places, have banned further lending or recovery of debts. In the southern state of Andhra Pradesh, aggressive selling by scores of unregulated microfinance firms has pushed huge numbers of already desperately poor farmers deeply into debt.